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March 13, 2013

SEC to ‘Customize’ Sanctions

Effort meant to respond to criticism that its enforcement actions are too broad

Even the SEC is hopping on the “customization” bandwagon—tailoring sanctions just for you.

Responding to criticism that it’s too lax in its enforcement and its bans are too broad, the commission is “experimenting with punishments that more closely fit the wrongdoing at issue in a bid to give its enforcement cases more bite,” according to Reuters.

Giving advice to pension funds or profiting from presenting investment seminars are examples of the type of behaviors it’s looking at.

As the news service notes, critics of the SEC's typical broad prohibitions say they are ineffective and not well enforced. Customized injunctions could also be a more precise tool than the “blunt instrument” of barring an individual from being a company officer or director.

“In the past year SEC lawyers have slowly started seeking injunctions that bar defendants from specific types of conduct, even if that conduct is itself legal,” Reuters reports. “They are relying on authority derived from the 2002 Sarbanes-Oxley investor protection law that makes explicit courts' authority to follow through on the SEC's recommended injunctions.”

In her testimony, White said that one of her “focus” areas as chairwoman would be regulating the conduct of broker-dealers and investment advisors when giving retail investment advice.

Stating that the Dodd-Frank and JOBS Acts have both placed a “daunting” task on the agency, White told lawmakers that once at the agency she intended “to personally take charge in assessing” which rules would be priorities.

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